Ubisoft Q1 Sales Slide 51 Percent, Major Games Delayed

Ubisoft said Monday that it missed fiscal Q1 guidance by 12 percent, reporting a 51 percent drop in sales to €83 million ($113.71 million) for the quarter ended June 30 on slow sales of Nintendo DS and back-catalog PlayStation 3 and Xbox 360 games, and a market that was "poorer-than-anticipated." Ubisoft chief Yves Guillemot said in a statement, "We are currently experiencing a very sharp slowdown in our sales for Nintendo DS as well as sales of back-catalog titles, in the context of a market that is tougher than anticipated. This will have a significant impact on our first-half showing." The drop in sales led the France-based publisher to reduce its Q2 2009-2010 sales guidance to €80 million ($109.60 million), which would represent a year-over-year drop of 54 percent. Ubisoft previously forecast Q2 sales of €130 million ($178.10 million). The publisher said it is only releasing a few games during Q2, including a new Teenage Mutant Ninja Turtles game for Wii and PS2, the multiplatform Cloudy With A Chance Of Meatballs, and various casual titles. Ubisoft also reduced full-year forecasts to €1.04 billion ($1.42 billion) with current operating income representing at least 7 percent of sales. Previously, the publisher forecast sales of around €1.1 billion ($1.507 billion) and at least 11 percent of sales. Aside from the expected poor showing from the first half of the year, contributing to the lower forecasts are the delays of Splinter Cell Conviction and Red Steel 2 to the fourth quarter of the year (ending March 2010) from the third quarter. In addition, Ubisoft delayed the next Ghost Recon and I Am Alive from fiscal Q4 into the next fiscal year. But Ubisoft said recently released games Call of Juarez and Anno were in line with expectations, and its Wii market share rose during Q1. "We are disappointed that we have to postpone the release of several major games but we consider that this choice is the best one in the long-term interests of Ubisoft," Guillemot added. "...The excellent response to our games at E3, as well as the high buzz generated for titles such as Assassin's Creed 2, Splinter Cell Conviction and Avatar, reinforce our belief that the company can achieve strong growth in the second half of the fiscal year." [UPDATE: In the Ubisoft conference call following the results, as noted by Kotaku, Guillemot commented that he believed DS game piracy was a major source of the slowness, suggesting: "Piracy is strong so we are working to put new figurines and new elements in the boxes that will change that in the future… for example in Europe we have the same market share in DS this year as last year." The Ubisoft boss separately commented that "Altogether on console... on the PC the piracy is quite a lot", adding: "We see a different attitude toward piracy in the U.S. than Europe. We did a survey that said our consumers will be more willing to buy products than pirate them."]